The tips and notes for this course say that u should not be capitalised. Would I be right in assuming here that it is only capitalised because it is at the beginning of the sentence?
Yes, it's only capitalized since it's at the beginning of the sentence. You may find "u" capitalized in texts where it refers to a holy figure and it is very formal, so it's not very common at all.
Is this a command, telling someone to eat rice, or is it asking them if they eat rice?
Does it only depend on the pumctuation?
It's just a statement.
what is the difference between u and uw?
uw = your (polite form of jouw) a possessive adjective
u = you, a personal pronoun
Is the u like the formal version in german?
"U eet rijst" = "Sie essen Reis"
"je eet rijst" = "Du isst rice"
Should you generally always use u for anyone that you don't know well?
I would like to know this as well.
Yes i have found a language that uses text speech
Would "u" in Dutch be used as a formal "you" in the same context as "usted" in Spanish?